How Farm Taaza Is Rev­o­lu­tion­iz­ing Fruits & Veg­etable Sourc­ing

The South In­dian fruits and veg­etable mar­ket size is more than $3 bil­lion. Less than five per­cent is cur­rently sourced by big re­tail­ers di­rectly from farm­ers. The op­por­tu­nity is im­mense. The next wave of sourc­ing will use ad­vanced tech­nol­ogy and an­a­lyt­ics

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It’s a shame that 30% to 40% of fruits and veg­eta­bles grown in In­dia get spoilt be­cause of too many touch points in the sup­ply chain – with sev­eral mid­dle­men han­dling them. Who­ever re­duces the touch points and sources di­rectly from the farm­ers has a big busi­ness op­por­tu­nity await­ing them.

That’s what Farm Taaza is at­tempt­ing to do. Started in 2015 by Ku­mar Ra­machan­dran and funded by Sil­i­con Val­ley an­gel in­vestors, the com­pany has done a turnover of Rs. 20 crore in 2016. It hopes to cross a turnover of Rs. 40 crore in 2017-18 and be close to breakeven by then. “We are a leader in the back end of the sourc­ing busi­ness, all the other big names we hear are in the fron­tend sourc­ing,” Mr. Ra­machan­dran told Bene­dict Para­manand of Sus­tain­abil­ity Next. Edited ex­cerpts:

Why should farm­ers be in­ter­ested in Farm Taaza?

We plan to im­ple­ment so­lu­tions where our farm­ers can plan their har­vest­ing dates to meet our re­quire­ments and of­fer to pick up the pro­duce com­pletely. We pay farm­ers on time. And pay for ex­actly what they of­fers (in terms of weight) and we tell them what we need and we also give a fore­cast. We are start­ing to treat farm­ers like pro­fes­sion­als so af­ter every pay­ment we also give them pay­ment ad­vice show­ing what they de­liv­ered and what we paid. They also can get his­tor­i­cal data on our pur­chases from them.

We are try­ing to solve fore­cast­ing prob­lems by us­ing an­a­lyt­ics. We tell the farm­ers what we want a week or a few days be­fore, though our cus­tomers give their or­ders only a day be­fore de­liv­ery.

We now have a mo­bile app giv­ing real time in­for­ma­tion on prices and de­liv­ery sta­tus. The next wave – the sys­tem will tell me how to price, where and how much to pro­cure. We plan to pro­vide ex­pert ad­vice to the farm­ers on im­prov­ing the yield and field oper­a­tions as well. This could be through part­ner­ship with many Agri-Tech star­tups that are now ex­pand­ing in this crit­i­cal space.

How’s the com­pe­ti­tion?

This is a very un­or­ga­nized busi­ness and op­er­ates the way it has been for past 100 years; along with many eth­i­cal chal­lenges. We wel­come or­ga­nized com­pe­ti­tion since the size of the pie is so huge. Even if each of us takes 5% to 10% mar­ket share it will make a big dif­fer­ence to the seg­ment.

In the B2B seg­ment, or­ga­nized play­ers do less than 1 % to­day.

We sup­ply di­rectly to large hos­pi­tals, ki­rana stores, ho­tels and some su­per­mar­ket chains as well across Bengaluru and Man­galuru in Kar­nataka, Chennai and Coimbatore in Tamil Nadu, and Hyderabad. Most large re­tail chains are our cus­tomers to­day.

Why should they take from you?

We tell them where the pro­duce comes from, when it was har­vested. Fresh­ness is as­sured by mak­ing the pro­duce avail­able to the cus­tomer within 8-22 hours of har­vest­ing. The pro­duce is op­ti­mally packed and trans­ported and graded at the source only to re­duce spoilage.

Role of Tech­nol­ogy

Un­less we use com­plete tech­nol­ogy, we can­not solve sup­ply chain prob­lems. We are still in the first phase of tech­nol­ogy ap­pli­ca­tion. What we call as leak­age – we have re­duced it by 70% and our next goal is next 90%. By end of this year will be mov­ing to ma­chine learn­ing al­go­rithm based so­lu­tions us­ing an­a­lyt­ics to fur­ther im­prove our ca­pa­bil­ity and prof­itabil­ity.

Fu­ture Plans

By May 2018 – we will break-even. I don’t want to scale for the sake of scale. We don’t want to a bil­lion dol­lar busi­ness; we want to be a prof­itable bil­lion dol­lar busi­ness. Farm Taaza may have a shot at that num­ber in five years. That’s where we are headed. Mar­ket is there.

Most star­tups in this and sim­i­lar ar­eas fo­cus on the front-end (Cus­tomer App). Our pri­or­ity is to fix the sup­ply chain first along with our unit eco­nom­ics. When I clean the back-end and move to a tech­nol­ogy-based de­ci­sion-mak­ing ap­proach, the world is ours.

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